The Singapore Economic Review

The last few years have seen an explosion of economic research on the consequences of natural disasters. This new interest is attributable first and foremost to a growing awareness of the potentially catastrophic nature of these events, but also a result of the increasing awareness that natural disasters are social and economic events: their impact is shaped as much by the structure and characteristics of the countries they hit as by their physical characteristics. Here, we survey the literature that examines the direct and indirect impact of natural disaster events specifically on the poor and their impact on the distribution of income within affected communities and societies. We also discuss some of the lacunae in this literature and outline a future agenda of investigation.

One of the most evident casualties of a natural disaster is the property market. The private and social costs from such events run into millions of dollars. In this paper, we use a unique dataset to examine the impact on residential house prices affected by natural disasters using a hedonic property (HP) values approach. For this purpose, we use data before and after a wildfire and floods from Rockhampton in central Queensland, Australia. The data is unique because one suburb was affected by wildfires and another was affected by floods. For the analysis, three suburbs namely Frenchville, Park Avenue and Norman Gardens are used. Frenchville was significantly affected by wildfires in the latter part of 2009 and to a lesser extent in 2012, while Park Avenue was affected by floods at the end of 2010, January 2011–2013. Norman Gardens, which was relatively unaffected, is used as a control site. This enables us to examine the before and after effects on property values in the three suburbs. The results confirm that soon after a natural disaster property prices in affected areas decrease even though the large majority of individual houses remain unaffected. Furthermore, the results indicate that the largely unaffected suburb may gain immediately after a natural disaster but this gain may disappear if natural disasters continue to occur in the area/region due to the stigma created. The results have several important policy decision and welfare implications which are briefly discussed in the paper.

The Great East Japan Earthquake, which occurred on March 11, 2011, triggered the Fukushima nuclear power plant accident. This study estimates the economic damage caused by the radioactive contamination from the plant using a hedonic approach. Our estimation results show that an increase of 1$\mu Sv∕h$ decreases the land price by 3.39% on average in Fukushima and Miyagi prefectures. Specifically, damage due to the radiation effect is estimated to cost approximately 64.1 billion yen in Fukushima. In addition, our result shows that commercial and business areas are more sensitive than residential areas to the radiation quantity.

This study examines the impact of natural disasters on stock market returns and on industries that are likely to be affected by such disasters. We find that different natural disasters have different effects on stock markets and industries. Our evidence suggests that while earthquakes, hurricanes and tornadoes could negatively affect market returns several weeks after the events, other disasters such as floods, tsunamis and volcanic eruptions have limited impact on stock markets. We also find that construction and materials industry is generally positively affected by natural disasters but non-life and travel industries are likely to suffer negative effects.

Following the Minimum Food Security Quota (MFS-Quota) proposed by Ruiz Estrada (2010) to evaluate and determine the food sustainability of any given country in the event of any natural disaster, this paper sets out to apply the MFS-Quota to test Malaysia’s food storage and supply readiness for any potential natural disaster that may critically affect the socio-economic and political well-being of the country. The primary objective of the MFS-Quota is to calculate the approximate amount of annual food storage that any country needs in order to subsist through any potential natural disaster. As such, any country could build its own MFS-Quota based on its agriculture production system(s) and national food policy focus.

Disaster research has been concerned with the role of adverse environmental conditions vis-à-vis adverse social conditions in determining food access during catastrophes. This paper investigates the issue, and presents household-data from flood-devastated Bangladesh to argue that, while hunger is clearly associated with exposure to disaster conditions, prior deficits in resources (given the education, occupation and ownership of productive assets of household-members) are more significant in determining the risk of consumption failure during catastrophes. The paper finds that, the risk-generating factors are often interrelated, but, their relative contributions vary across households having varying locations of natural hazards and in consumption distribution.

The coastal zone in Bangladesh is the most powerfully lethal due to cyclones and storm hazard where 29% of the total population reside. Thus, collective disaster mitigation measures are urgent, and it is important to understand people’s pro-social attitude toward such countermeasures. However, few studies on this issue have been conducted in the context of developing countries, such as Bangladesh, and we therefore address this issue. We made a questionnaire survey of 1,000 respondents and elicited (i) a willingness to donate their labor (WDL) and (ii) a willingness to pay (WTP) to collective countermeasures for avoiding the damages from cyclones and associated disasters. With this data, we examine WDL and WTP in relation to respondents’ occupation, education and income. The novelty lies in offering respondents an option of choosing WDL and/or WTP in the questionnaire. The study finds that the poor and less educated people are likely to choose WDL and willing to donate more labor, while rich and educated people are likely to choose WTP and willing to donate more money. However, we also find that voluntary labor donation from poor and less educated people is significant in that donation from poor and less educated people exceeds that from rich and educated people on per-household basis. Poor and less educated people may be more pro-social and WDL is an important source of contribution to be utilized in natural disaster mitigation of developing countries. This finding can be considered a useful guidance for future policies in more general cases, since it is consistent with observed labor donations for the recovery in the 2011 earthquake off the Pacific coast of Tohoku, Japan.

Disasters result in disruptive effects on various aspects of community in different scales and disaster relief is important in understanding negative effects from the shock. Using unique dataset after the 2011 Great East Japan Earthquake and Tsunami, the decision return to the original residence is analyzed in this study. We find that having jobs related to the original region and ownership status have the largest impact on the return decision. Furthermore, these results are different for each age group.

In 1995, the Kobe earthquake occurred in the second largest economic region of Japan, and its economic damages were accounted around 10 trillion yen. This paper presents an empirical investigation of long-run economic effects of the event based on a time-series data. The results indicate that the event had created statistically significant deviations from the pre-earthquake growth path of Kobe. In addition, the comparison with the projected pre-event growth path revealed that the long-run effects have resulted in a steady decline of per capita GRP, while the short-run impacts led to some positive impacts from recovery and reconstruction during the first several years.

This paper investigates the impact of the Great Hanshin-Awaji earthquake on plant input, output, total factor productivity (TFP) and exit using Japanese plant-level manufacturing data. We employ the difference-in-differences (DID) estimation method to identify the effects of the quake and find that the quake had an impact on manufacturing. The results suggest that production was influenced by the quake, particularly in the first year after the quake. Furthermore, the quake did not influence manufacturing industries uniformly. The effects are different based on specifications, variables, and industries. However, the quake had little impact on the exit of plants.

Having achieved an export-led exponential economic growth, Singapore remains vulnerable to both natural disasters and economic crises. However, the economic repercussions and policy responses to extreme events for an island nation like Singapore are not as widely known or studied. This paper illustrates that impacts of a health disaster [Severe Acute Respiratory Syndrome (SARS)] and an economic crisis [Global Financial Crisis (GFC)] on the Singapore economy based on selected indicators of the financial market, macroeconomy and property sector. Crises of different nature entail different policy responses of different scales and this is highlighted in the policy responses to both SARS and GFC toward economic recovery. In the case of SARS, there were preventive measures toward diseases but no reactive measures as the SARS virus was a new strain. For GFC, the policy measures were simply reactive as preventive measures failed to regulate the financial markets effectively. Our paper makes the case that the impacts of such extreme events are systemic as they affect all aspects of Singaporean society and that, moreover, the island nation is more vulnerable to these shocks than is currently acknowledged.